Foreign investment is incredibly valuable to countries worldwide, which is why many nations implement programs and other initiatives to attract it. These initiatives include welcoming business frameworks and economic incentives.
One popular method of encouraging foreign investment into a country is a free zone. These designated economic areas offer financial, infrastructure and sometimes tax advantages to businesses and entrepreneurs in return for their investment and trade within the relevant country or region.
As it’s the Middle East’s largest economy, the question is often asked – does Saudi Arabia have freezones? In this article, we’ll answer the question, providing the key considerations you should consider when investing or starting a business in the region.
Saudi Arabia’s freezones
The simple answer to the question, “Does Saudi Arabia have freezones?” is yes. However, they differ slightly from those in the UAE and elsewhere in the Gulf region.
Developed to drive the country’s Vision 2030 initiative, Saudi Arabia’s free zones take the form of economic cities or clusters. They offer tailored benefits to businesses across numerous industries and sectors to attract trade to the region and diversify the country’s economy.
Saudi’s free zones primarily focus on developing mega-projects or transforming entire regions and industries rather than simply easing foreign entry into its markets. One popular example of this approach is the Red Sea Project, which aims to turn the country’s coastline into a world-class tourism destination.
As a result, many free zones will cater to businesses that can support with delivering this aim. With numerous mega-projects underway at any given time, including The Line, Trojena and the King Salman Park development, there are rich opportunities on offer for international businesses in Saudi Arabia.
Types of free zones in Saudi Arabia
Many of Saudi Arabia’s free zones are split into designated areas depending on industry or the objectives of each region. This includes industrial zones focusing on energy production, manufacturing and other heavy industries. These areas will usually have direct links or proximity to ports and major transport infrastructure.
Others, such as technology and innovation-related zones, will focus more on providing fast connectivity, mentoring and networking opportunities, easy access to capital and funding, and schemes such as incubators and accelerators.
Saudi Arabia’s financial freezones are overseen by regulators to ensure strict compliance with global and domestic laws regarding money laundering and KYC. Businesses here usually benefit from easy access to financial expertise and related government agencies and services.
Key free zones in Saudi Arabia
There are numerous freezones in Saudi Arabia, welcoming businesses from all industries, including renewable energy, finance, construction and tourism. Among the most popular are:
King Abdullah Economic City (KAEC)
Spanning over 60 square kilometres, KAEC offers easy access to transport and infrastructure links on Saudi Arabia’s Red Sea coast – making it an ideal spot for both global and domestic trade. This includes direct access to King Abdullah Port.
The region’s fastest-growing manufacturing and logistics hub, it welcomes businesses large and small, from startups and solo entrepreneurs to international enterprises.
NEOM
In the northwest of the county, near the borders of Egypt and Jordan, NEOM is a special economic zone aimed at driving innovative solutions to diversify Saudi Arabia’s economy. Fuelled by USD 500bn in funding from the country’s Public Investment Fund, it welcomes businesses and entrepreneurial talent from 14 sectors including technology, manufacturing, design, tourism, media and culture.
Encompassing The Line, Oxagon, Trojena and Sindalah developments, NEOM is a first-of-its-kind business, cultural and residential hub that’s already home to employees and residents from over 100 countries.
Jeddah Economic City (JEC)
JEC is a multi-use freezone comprising businesses from trade, tourism, logistics, retail and more. It is perhaps most notable as it includes the Jeddah Tower development, which is set to be the tallest building in the world upon its completion.
Eventually occupying over 5.3m metres of land, and with close connections to King Abdulaziz International Airport, The City will act as a gateway between Saudi Arabia and the wider world for investment, trade, tourism and culture.
Advantages of setting up a business in a Saudi free zone
There are several advantages to setting up in a Saudi free zone, including:
Foreign ownership
Most free zones permit 100% company ownership by foreign individuals. This means those investing from overseas do not require the services of a local agent or partner.
Simplified regulation
Navigating corporate processes in a foreign jurisdiction can prove difficult. However, as Saudi Arabia’s freezones cater for international entrepreneurs and business owners, many administrative and incorporation procedures have been simplified to ease the process.
Tax advantages
Depending on the zone and industry, businesses in Saudi freezones can often benefit from VAT, corporate and import/export tax deductions and exclusions.
About Creative Zone
While the process of starting a business in Saudi Arabia is designed with simplicity in mind, it can be daunting if you are new to working in the country.
That’s where Creative Zone can help. We have a long and successful history helping investors start new lives here in the Middle East. Our dedicated team is well-versed in the region’s business and real estate markets and the complexities of the immigration process.
When you work with us, you get fast, reliable and unbiased advice on your unique business setup requirements. We can help you choose the right kind of license for your business activity and take you through the entire process from start to finish.
We’re here to assist every step of the way. No matter your chosen activities, legal entity or visa requirements, we’re on hand with support, guidance and expertise. So, if you’re looking to lay the foundations for life in Saudi Arabia, Creative Zone is your ideal starting point.
Get in touch today to take the first step.
